By Gurdip Singh
SINGAPORE — The Central Provident Fund Investment Scheme had returns of 13.4% on investments in unit trusts and 12.5% on those in investment-linked insurance products offered to participants in 2006, according to Standard & Poor's.
For the three years ended Dec. 31, 95.2% of all CPFIS-offered unit trusts and 94.4% of the ILPs produced positive returns, especially funds invested in global asset allocation, Asia-Pacific equity (excluding Japan), European equity and global equity strategies, according to a report by S&P Singapore.
The strong returns are good news for CPFIS participants, as their investments have rebounded from the underperformance of the funds in 2000 and 2001 because of weak Asian economies.
In 2006, equity funds offered through CPFIS had an average return of 15.8%, exceeding performance of the two other unit trust investment types. The asset allocation funds and fixed-income funds posted returns of 6.6% and 1.7%, respectively.
Speaking at a news conference last week (Feb. 26), Sharon Wong, Standard & Poor's director for equity research in Asia, said the CPFIS investments were buoyed by strong equity markets in 2006, with the Straits Times index returning 27.2% and the S&P/ASX 200 19%, compared to the S&P 500's 13.6%.
The Central Provident Fund comprises three accounts funded by contributions from workers and employers: the ordinary account, which can be used to save for a home or education; the special account, which is retirement savings; and a medical savings account. The ordinary and special account contributions are invested through managers authorized by the CPFIS. Individual participants direct their investments.